Denali Therapeutics Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Good afternoon, everyone, and thank you for joining us today to discuss Denali Therapeutics' second quarter 2026 financial results and business highlights.

Earlier today, we issued our earnings press release and filed our quarterly report. The press release, financial tables, and today's presentation are available in the investor relations section of our website. Before we begin, I would like to remind everyone that today's discussion will include forward-looking statements. These statements are based on our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings and the cautionary language in today's press release and presentation for a discussion of these risks. Denali undertakes no obligation to update these forward-looking statements except as required by law.

Joining me today are Ryan Watts, our Chief Executive Officer; Katie Peng, our Chief Commercial Officer; Alexander Schuth, our Chief Operating and Financial Officer; and Peter Chin, our Chief Medical Officer and Head of Development. Ryan will begin with opening remarks. Katie will provide an update on the U.S. launch of AVLAYAH. Ryan will return to discuss pipeline highlights. Alex will review our financial results. Peter will join the team for the question and answer session.

Ryan? Thanks, Laura. Thank you everyone for joining us today.

We will begin on slide five. This was a transformative quarter for Denali. We completed the first full quarter of the AVLAYAH launch, advanced two Transport Vehicle-enabled Alzheimer's disease programs into clinical development, further strengthened our financial position. Before I discuss those highlights, I want to begin with why we are here. At Denali, our purpose is to transform life for people living with serious diseases. That includes children and adults with rare genetic diseases such as Hunter syndrome, Sanfilippo syndrome, FTD-GRN, Pompe disease, as well as the millions of people living with common neurodegenerative diseases such as Alzheimer's disease and Parkinson's disease. Across both groups, our mission is the same: to bring the power of biologic medicine to the brain. Slide six. The common challenge across many of these diseases is the blood-brain barrier.

For over a decade, we have built the Transport Vehicle platform to address that challenge by engineering biologic medicines to cross the blood-brain barrier through receptor-mediated transport. Earlier this year, that work reached an important milestone. Slide seven. With FDA approval of AVLAYAH, Denali became a commercial company and began delivering our first medicine to patients. For the Hunter syndrome community, AVLAYAH is the first new FDA-approved therapy in nearly 20 years and a new treatment option designed to reach both the body and the brain. Importantly, AVLAYAH became the first approved medicine developed using our Transport Vehicle platform and the first FDA-approved biologic specifically designed to cross the blood-brain barrier. For Denali, AVLAYAH is much more than a product. It is the first proof that our platform can progress from scientific concept to an approved medicine for patients. Slide eight. We believe Denali today represents a powerful and differentiated combination to create significant value for patients, the healthcare system, and investors in the near and long term.

We have a commercial product in AVLAYAH and an encouraging early launch. We have a broad clinical pipeline spanning rare genetic diseases and common neurodegenerative diseases, each with substantial market potential. We have a validated and scalable Transport Vehicle platform and scientific leadership in the field of BBB transport. We have the operational capabilities and financial strength to execute from discovery through development, manufacturing, and commercialization. Together, these attributes position Denali to create near-term growth and sustainable long-term value. Slide nine. Turning to the quarter, AVLAYAH generated $3.6 million in net product revenue in its first full commercial quarter.

The positive response from the Hunter syndrome community and the physicians caring for these individuals reflects years of partnership with patients, families, advocacy organizations, and clinicians. We could not have achieved this milestone without their unwavering commitment to advancing new treatment options. I also want to recognize the outstanding execution by our commercial team in the early stages of this launch. In the pipeline, DNL628 targeting tau and DNL921 targeting Aβ both advanced into clinical development for Alzheimer's disease, with initial clinical data expected in 2027. Following the sale of our Priority Review Voucher in July, our pro forma cash equivalents, and marketable securities exceeded $1.1 billion. Slide 10. A key focus of today's call will be the AVLAYAH launch. Katie will walk through the early commercial indicators, what we are learning, and how we are building the foundation for continued growth.

Thank you, Ryan. On slide 12, I'd like to start by reinforcing why we believe AVLAYAH is setting a new bar for the treatment of MPS II. For the first time, a therapy is designed to reach the whole body, including the brain, and can normalize key disease biomarkers both in the CNS and peripherally.

These data continue to reinforce physician confidence and resonate with families, supporting the strong momentum we are seeing in the launch. Slide 12. Hunter syndrome represents one of the more prevalent mucopolysaccharidoses and affects a meaningful patient population within the rare disease community. The U.S. opportunity is highly concentrated, with most eligible patients already identified and receiving conventional IDS enzyme replacement therapy at a relatively small number of specialized treatment centers. These are pediatric patients with pre-symptomatic or symptomatic neurologic manifestations who have not progressed to advanced neurologic impairment. We estimate that there are approximately 2,000 patients worldwide in the addressable market, including approximately 500 prevalent patients with Hunter syndrome in the United States. Based on the FDA-approved indication, approximately 75% of the U.S. prevalent population, or roughly 375 patients, are currently eligible for AVLAYAH.

In addition, about 30 children are born each year with Hunter syndrome, providing an ongoing opportunity to initiate treatment early. Our ongoing phase III COMPASS study is an important next step in advancing AVLAYAH, with the goal of supporting full approval and expansion of the label to include adults. Ultimately, our goal is to reach all eligible patients worldwide. Slide 13. Our launch is being executed against four core strategies. First, partnering closely with the Hunter syndrome community through a high-touch, community-centered approach. In rare diseases, families often learn from and support one another. We believe that positive experience with both AVLAYAH and the Denali team helps build trust, increase awareness, and encourage additional families to seek treatment. Second, helping physicians evaluate AVLAYAH and supporting treatment centers as they prepare to initiate therapy.

Strong clinical conviction is creating urgency amongst physicians to switch eligible patients and engage payers to accelerate access. Third, helping each patient and family navigate the steps from prescription through their first infusion. Fourth, driving fast label-aligned coverage decisions that help remove payer roadblocks. After our first full quarter of launch, what has been particularly encouraging is how these four strategies have reinforced one another. Strong clinical conviction has driven physicians and patient demand. That demand has accelerated payer coverage, and together, these dynamics are enabling more patients to begin therapy. Slide 14. Beginning with physicians, we entered the launch with a strong foundation. Before approval, more than 80% of physicians surveyed were already aware of AVLAYAH. 90% viewed the biomarker and clinical data as motivating to prescribe.

Since approval, we have reached approximately 80% of targeted healthcare organizations with AVLAYAH's launch information through our field engagements, scientific exchange, educational webinars, and treatment center support. These activities have been highly impactful and are driving strong engagement across a significant number of treating physicians. Physicians constantly tell us that the ability to address neurologic manifestations is highly meaningful and that most patients experience neurologic symptoms at some point during the course of their disease. That belief is translating into action, as many treatment centers with eligible patients are working with families to navigate reimbursement and transition patients to AVLAYAH. Slide 15. We have seen equally strong engagement from patients and caregivers. Through our launch webinars focused on clinical data and access, as well as with Denali Patient Services, we reached more than 100 families. That represents greater than one-quarter of the eligible U.S. patients.